Sunday, January 18, 2009

Robert Bernerd Anderson: from tax policy to tax evasion

Image from nationmaster.com

Like John Swainson, Robert Bernerd Anderson successfully maneuvered a political career before encountering scandal outside of office.

Born in 1910 in Texas, Anderson ran for a seat in the state legislature in 1932, the same year he was wrapping up law school at the University of Texas. After serving one term, he held several posts in the Texas government, including assistant attorney general, chairman of the state's unemployment commission, and tax and racing commissioner. He was exempted from service in World War II due to a childhood case of polio that left him with a limp. He did serve as a civilian aide to the Army Secretary during the war, however. In 1941, he became the manager of a half million-acre cattle ranch, which included supervising oil and gas leases with several Texas oil companies. He served as an officer with the Mid-Continent Oil & Gas Association of Texas during the late 1940s.

Originally a Democrat, Anderson supported Dwight D. Eisenhower for President in 1952. The next year, Eisenhower appointed him Secretary of the Navy. It was Anderson, at Eisenhower's request, who desegregated that branch of the military. He later became Deputy Secretary of Defense and resigned from government work, switching parties to become a Republican before Eisenhower's re-election in 1956. While heading a Canadian mining company, Anderson kept close ties with the President, making a trip to the Middle East in 1956 to encourage better relationships between Egypt and Israel. In 1957, he returned to Eisenhower's cabinet as Treasury Secretary. Remaining in the position until the end of Eisenhower's presidency, Anderson encouraged the use of a budget surplus to reduce the national debt instead of lower taxes.

Over the next few decades, Anderson worked as an investment specialist in New York City, served on the boards of several companies, including Pan Am and Goodyear, and was an economic adviser to the Sultan of Oman. He also maintained ties with the succeeding presidential administrations, with Presidents John F. Kennedy and Lyndon B. Johnson appointing him to special committees on foreign aid and the federal budget. Anderson was also appointed special ambassador to Panama to address the issue of ownership of the Panama Canal. He resigned from that post in 1973 after a coup overturned a preliminary treaty, and his successor negotiated the treaty which ultimately turned over the canal to Panama at the turn of the millennium.

From 1983 to 1985, Anderson ran the Commercial Exchange Bank and Trust of Anguilla in the British West Indies with a partner, David Gould. Unfortunately, this was an illegal offshore bank, one where anonymous clients could deposit illegally obtained funds or hide income from the Internal Revenue Service. The bank had offices in New York, but was not registered or subject to regulation, and had no deposit insurance. Investors lost about $4.4 million, which Anderson gave to longtime friend Newton Steele. Steele used the funds to buy oil and gas leases in Oregon and pay off debts.

Anderson was charged with tax evasion for the years of 1983 and 1984, under-reporting his income by some $240,000. He was also suspected of being involved in a plot to sell arms to Iran, but never charged. After pleading guilty to the charges in 1987, Anderson was sentenced to serve one month in jail, five months of house arrest, and five years of probation. He was also ordered to pay back taxes to the IRS, pay restitution to the investors, and enter an alcohol treatment program. The judge noted that Anderson had been treated for alcoholism 10 times since 1981 and may have been negatively affected by his struggle to care for his late wife, who had suffered from Alzheimer's, over the course of a decade.

The conviction came very close to the end of Anderson's life. He was disbarred, and in 1989 died from complications after surgery for throat cancer.

Sources: The Eisenhower Presidential Library and Museum, "Moon Sentenced to 18 Months in Jail" in the Washington Post on July 17 1982, "Ex-Treasury Chief Admits Tax Fraud and Banking Crime" in the New York Times on March 27 1987, "From Treasury Secretary to Guilt in Fraud" in the New York Times on June 16 1987, "Ex-Treasury Chief Gets 1-Month Sentence in Bank Fraud Case" in the New York Times on June 26 1987, "Robert B. Anderson, Ex-Treasury Chief, Dies at 79" in the New York Times on Aug. 16 1989